Government PIT (GOV) Announces $231M Property Acquisition from HRPT Prop. Trust (HRP)
Up)
Government Properties Income Trust (NYSE: GOV) today announced that it has entered a series of agreements to purchase 15 properties primarily leased to government tenants for approximately $231 million.
The properties are being acquired by GOV from HRPT Properties Trust (NYSE: HRP). GOV was formerly a 100% owned subsidiary of HRP, and HRP continues to own 9,950,000 common shares of GOV, or approximately 31.8% of GOV’s total common shares outstanding. When GOV completed its initial public offering in June 2009, HRP granted GOV a right of first refusal to purchase properties which HRP owns that are majority leased to government tenants, including the 15 properties which are the subjects of the agreements announced today.
The current annualized net operating income which GOV expects from these 15 properties is approximately $20.5 million/year, including straight line rents recognized under generally accepted accounting principles, or GAAP, which creates a purchase price capitalization rate for the 15 properties combined of approximately 8.9% per annum. In addition, these purchases will diversify GOV’s revenue sources by tenants and geography: 11 additional U.S. Government agencies and one new state tenant will be added to GOV’s tenants; and properties in four states will be added to the 20 states (and District of Columbia) in which GOV currently owns properties. Charts showing GOV’s sources of rental income by tenant and by geography as of June 1, 2010, and pro forma as if all of the 15 properties to be purchased were owned at that time are presented at the end of this press release.
These acquisitions are not expected to materially impact GOV’s average lease maturity (weighted by rents) of almost five years.
The purchases of the 15 properties are expected to close in phases between today and March 31, 2011. All purchases made in the near future are expected to be funded by GOV using cash on hand and drawings under GOV’s revolving bank credit facility. Additional purchases and repayments of GOV’s revolving credit facility are expected to be by a mix of long term capital which will be determined based upon market conditions. GOV expects that it will realize funds from operations, or FFO, accretion as a result of these acquisitions, but there can be no assurance it will be able to do so. The FFO per share accretion which GOV may realize as a result of these purchases will depend, in large part, upon the capital costs which GOV incurs to fund these acquisitions.
Each of GOV and HRP are managed by Reit Management & Research LLC, or RMR. Accordingly, the purchase agreements announced today were negotiated by special committees of the Boards of GOV and HRP composed solely of Independent Trustees who are not also Trustees of the counterparty. Also, the agreed purchase prices are within the ranges of market values determined by an independent third party appraiser.
The properties are being acquired by GOV from HRPT Properties Trust (NYSE: HRP). GOV was formerly a 100% owned subsidiary of HRP, and HRP continues to own 9,950,000 common shares of GOV, or approximately 31.8% of GOV’s total common shares outstanding. When GOV completed its initial public offering in June 2009, HRP granted GOV a right of first refusal to purchase properties which HRP owns that are majority leased to government tenants, including the 15 properties which are the subjects of the agreements announced today.
The current annualized net operating income which GOV expects from these 15 properties is approximately $20.5 million/year, including straight line rents recognized under generally accepted accounting principles, or GAAP, which creates a purchase price capitalization rate for the 15 properties combined of approximately 8.9% per annum. In addition, these purchases will diversify GOV’s revenue sources by tenants and geography: 11 additional U.S. Government agencies and one new state tenant will be added to GOV’s tenants; and properties in four states will be added to the 20 states (and District of Columbia) in which GOV currently owns properties. Charts showing GOV’s sources of rental income by tenant and by geography as of June 1, 2010, and pro forma as if all of the 15 properties to be purchased were owned at that time are presented at the end of this press release.
These acquisitions are not expected to materially impact GOV’s average lease maturity (weighted by rents) of almost five years.
The purchases of the 15 properties are expected to close in phases between today and March 31, 2011. All purchases made in the near future are expected to be funded by GOV using cash on hand and drawings under GOV’s revolving bank credit facility. Additional purchases and repayments of GOV’s revolving credit facility are expected to be by a mix of long term capital which will be determined based upon market conditions. GOV expects that it will realize funds from operations, or FFO, accretion as a result of these acquisitions, but there can be no assurance it will be able to do so. The FFO per share accretion which GOV may realize as a result of these purchases will depend, in large part, upon the capital costs which GOV incurs to fund these acquisitions.
Each of GOV and HRP are managed by Reit Management & Research LLC, or RMR. Accordingly, the purchase agreements announced today were negotiated by special committees of the Boards of GOV and HRP composed solely of Independent Trustees who are not also Trustees of the counterparty. Also, the agreed purchase prices are within the ranges of market values determined by an independent third party appraiser.
You May Also Be Interested In
- UPDATE: SAP's (SAP) America Unit to Buy Ariba (ARBA) for $45/Share
- CVR Energy (CVI) Hires Jefferies for Sale Process
- Dollar Thrifty (DTG) Shares Spike Higher as Hertz (HTZ) Could Make an Offer
Create E-mail Alert Related Categories
Mergers and AcquisitionsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
