Two non-traded REITs, Griffin Capital Essential Asset REIT (GCEAR) and Signature Office REIT (Signature), are joining forces to create a $3 billion office and industrial REIT. Unanimously approved by each REIT’s board of directors, the merger is contingent upon formal approval from Signature shareholders.
The merger agreement, which is expected to be completed in the first half of 2015, will provide Signature shareholders with 2.04 shares of GCEAR common stock. GCEAR will also refinance Signature’s existing debt of $159 million with its existing credit facility.
The GCEAR executive team will continue to lead the merged company.
Kevin Shields, Chairman and Chief Executive Officer of GCEAR, commented, “As we look forward to the next phase of our lifecycle, we believe the additional scale, diversity and operating efficiencies that our combined portfolios will garner is paramount in driving additional stockholder value in the future. Earlier this year we sold all of the remaining capital stock in our follow-on offering, and once we fully invest this equity, we expect our total capitalization to exceed $3 billion upon stabilization.”
Griffin Capital’s Chief Investment Officer, Michael Escalante, added, “We look forward to having Signature shareholders standing shoulder-to-shoulder with GCEAR and its management team, which has invested over $26 million of its own capital in GCEAR. We are excited about this opportunity and, in our opinion, a ‘win-win’ scenario was engendered by the understanding that together we can accomplish more than we can apart.”
Signature’s portfolio, which contains 15 buildings across eight states, is complementary to Griffin’s existing portfolio of key operating facilities in the form of single-tenant office and industrial properties.
Frank Bishop, Chairman of the Board of Directors of Signature, commented on the proposed merger, stating “We are excited about the opportunity to merge our company with Griffin. We believe the proposed transaction is in the best long-term interest of our stockholders, allowing them to be part of a company with greater scale, size and diversification. The combined company will have a portfolio of 69 properties in 21 states with strong occupancy and consisting largely of single-tenant, net lease office properties. We believe the combined company will be well-positioned for growth and the execution of a successful liquidity event in the future.”