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Bluerock Residential Growth REIT, Inc. (NYSE:BRG) (the "Company") today announced that it has entered into a definitive agreement with affiliates of Blackstone Real Estate ("Blackstone") under which Blackstone will acquire all outstanding shares of common stock of BRG for $24.25 per share in an all-cash transaction valued at $3.6 billion (the "Acquisition").
Under the terms of the agreement, Blackstone will acquire 30 multifamily properties comprising approximately 11,000 units as well as a loan book secured by 24 multifamily assets. The properties consist of high-quality garden-style assets with significant green space and resort-style amenities, built, on average, in 2000. The majority of the properties are located in Atlanta, Phoenix, Orlando, Denver and Austin.
Prior to the Acquisition, the Company separately intends to spin off its single-family rental business to its shareholders (the "Spin-Off" and together with the Acquisition, the "Transaction") through the taxable distribution to shareholders of all of the outstanding shares of common stock of a newly formed real estate investment trust named Bluerock Homes Trust, Inc. ("BHOM"), which will be externally managed by an affiliate of Bluerock Real Estate. BHOM will own interests in approximately 3,400 homes, including 2,000 through preferred/mezzanine investments, located in fast growing, high quality of life and knowledge economy markets across the United States. The Company's shareholders will receive shares of BHOM, with a current implied Net Asset Value estimated at $5.60 (based on the midpoint of the valuation range provided by Duff & Phelps, independent financial advisor to the Company's board of directors), for each share of Company common stock. There can be no assurance that the trading price upon a listing of BHOM will be equal to or greater than this estimated NAV.
The Transaction has been unanimously approved by the Company's board of directors and the Acquisition, excluding the value of BHOM, represents a premium of approximately 124% over the unaffected closing stock price on September 15, 2021, the date prior to a media article reporting that the Company was exploring strategic options including a sale.
"We are very proud to enter into a transaction that delivers tremendous value to our shareholders. We believe the substantial premium to our historic trading price is a testament to our success in building a best-in-class institutional-quality multifamily apartment portfolio in our attractive knowledge-economy target markets, along with the robust process run by the board of directors and management to secure maximum value for our shareholders," said Ramin Kamfar, Company Chairman and CEO.
Asim Hamid, Senior Managing Director at Blackstone Real Estate, said, "Bluerock's portfolio consists of high-quality multifamily properties in markets across the U.S. experiencing some of the strongest fundamentals. We look forward to bringing our best-in-class management to these properties to ensure they continue to be operated at the highest standards for the benefit of tenants and the surrounding communities."
Completion of the Acquisition, which is currently expected to occur in the second quarter of 2022, is contingent upon consummation of the Spin-Off, as well as customary closing conditions, including the approval of the Company's shareholders, who will vote on the transaction at a special meeting on a date to be announced. The Acquisition is not contingent on receipt of financing by Blackstone.
Most members of the Company's senior management, along with certain entities related to them, have agreed to retain their interests in the Company's operating partnership, which will hold the assets related to the single-family rental business upon completion of the Spin-Off, rather than receiving cash consideration.
Morgan Stanley & Co. LLC and Eastdil Secured LLC are the Company's lead financial advisors with BofA Securities also serving as an advisor. Wachtell, Lipton, Rosen & Katz, Kaplan Voekler Cunningham & Frank, PLC, and Vinson & Elkins, LLP are serving as the Company's legal counsel. Barclays and Wells Fargo Securities LLC are Blackstone's financial advisors and Simpson Thacher & Bartlett LLP is Blackstone's legal advisor.
