Trizec Properties Inc., which last month bought $1.63 billion in Los Angeles and San Diego office properties from Arden Realty Inc., said Monday that it is being acquired by Brookfield Properties Corp. and the Blackstone Group for $8.9 billion.
It's considered the second-largest takeover ever of a real estate investment trust. Buyout firm Blackstone and New York-based Brookfield, which owns the World Financial Center in lower Manhattan, will pay $29.01 a share for Chicago-based Trizec, 18 percent more than its closing price on Friday. The partners are paying $34.09 Canadian, or $30.97 U.S., for Trizec's Canadian subsidiary.
Trizec manages 61 office complexes, or 40 million square feet, including Bank of America Plaza in Los Angeles. The company had $4.7 billion in assets in 2005. Trizec Canada owns 38 percent of Trizec Properties.
The acquisition comes on the heels of Trizec expanding into the Southern California office market. Trizec bought 13 properties from Arden Realty for $1.6 billion earlier this year, nearly doubling the size Trizec's presence in Los Angeles to more than 8.5 million square feet.
The Arden deal also gave Trizec a pipeline of future office buildings because it contained parcels with entitlements for close to 1 million square feet of new development.
Most of that potential was at the Howard Hughes Center, where Trizec had begun discussing building a speculative office building one of a number of such projects slated for the Westside.
Even before the Arden deal, Trizec had begun assembling a portfolio of trophy downtown L.A. office towers: Ernst & Young Plaza, Figueroa at Wilshire and Bank of America Plaza.
"In the last three years, Trizec Properties stockholders have enjoyed an extraordinary return of 185 percent," said Trizec Chairman Peter Munk in a statement. "Last year alone, Trizec Properties delivered a total return of 26 percent to stockholders, more than double the industry average. This transaction delivers to all Trizec Properties and Trizec Canada stockholders the full value created over this period."
Shareholders of both Trizec and Brookfield must approve the deal, expected to close by the fourth quarter.
Staff reporter Andy Fixmer contributed to this story.
For reprint and licensing requests for this article, CLICK HERE.