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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Government Properties Income Trust of Beneficial Interest (delisted) | NASDAQ:GOV | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 6.87 | 6.87 | 6.95 | 0 | 01:00:00 |
Government Properties Income Trust (Nasdaq:GOV) today announced that its Board of Trustees has unanimously approved a definitive merger agreement to acquire all of the outstanding common shares of First Potomac Realty Trust (NYSE:FPO) for an aggregate transaction value of approximately $1.4 billion, including $11.15 per FPO common share in cash and the repayment or assumption of FPO debt. This transaction is subject to the approval of at least a majority of FPO’s common shareholders and other customary conditions and is expected to close prior to year end 2017.
David Blackman, President and Chief Operating Officer of GOV, made the following statement:
“The acquisition of FPO enables GOV to expand its business strategy to include the acquisition, ownership and operation of office properties leased to both government and private sector tenants in the metropolitan Washington, D.C. market area. The metropolitan Washington, D.C. market area is one of the largest office markets in the U.S. and the nation’s largest beneficiary of spending by the U.S. government. Outside of the metropolitan Washington, D.C. market area, GOV will continue to focus on acquiring, owning and operating office properties that are majority leased to government tenants.”
“In addition to this transaction providing GOV with new potential growth opportunities, we expect to realize approximately $11 million of annual general and administrative expense savings compared to FPO on a stand alone basis. We are also pleased that we were able to achieve an attractive per share purchase price.”
GOV believes FPO has high quality office and industrial properties that are well located primarily in the metropolitan Washington, D.C. market area. FPO’s portfolio includes 39 properties (74 buildings) with approximately 6.5 million square feet that was 92.2% leased as of March 31, 2017 (including two joint venture properties which are 50% and 51% owned by FPO). As of March 31, 2017, government and other investment grade rated tenants represented approximately 43.9% of FPO’s total annualized rental income.
As of March 31, 2017 and pro forma for GOV’s acquisition of FPO, GOV’s portfolio and selected operating metrics would have been:
Transaction Structure and Financing
The cash consideration to be paid to FPO shareholders will be $11.15 per FPO common share, or approximately $683 million in aggregate. The remaining transaction value includes the expected repayment of approximately $418 million of FPO debt and assumption of approximately $232 million of FPO mortgage debt, and the payment of transaction fees and expenses, net of FPO cash on hand. FPO has agreed that it will not pay any distributions to its shareholders before the closing of the transaction. GOV’s distributions to its shareholders will not be impacted by the transaction.
GOV expects to finance this transaction on a long term basis with the sale of common shares, additional debt, including senior unsecured notes, mortgage financing and/or bank debt, and/or with proceeds from the sale of certain properties. Pending the completion of GOV’s long term financing plan, GOV may use borrowings under its existing revolving credit facility and under a new 364 day, fully committed bridge loan facility (subject to certain customary conditions) for up to $750 million to finance the transaction.
Based on GOV’s preliminary estimate of 2018 net operating income attributable to the FPO properties (including the estimated pro-rata net operating income from two unconsolidated joint venture properties) and subject to completion of GOV’s accounting analysis, GOV believes that the estimated acquisition cap rate is approximately 7.0%. GOV believes this transaction will be accretive to GOV’s normalized funds from operations per share after 2018 and approximately leverage neutral on a debt to gross assets basis after completion of GOV’s long term financing plan.
This transaction is subject to the approval of at least a majority of FPO’s common shareholders and other customary conditions. As part of the agreed transaction terms, GOV has the option to pursue the acquisition of FPO in a tender offer for all of the outstanding FPO common shares, which may decrease the time required to close the transaction. The transaction is expected to close prior to year end 2017.
Advisors
Citigroup is acting as exclusive financial advisor to GOV and Sullivan & Worcester LLP is serving as legal counsel to GOV. Joint Lead Arrangers for the bridge loan facility are Citigroup, Bank of America, N.A., Morgan Stanley and UBS Investment Bank.
Conference Call
GOV will host a conference call today at 10:00 a.m. Eastern Time to discuss today’s announcement. This call will be accompanied by an investor presentation that has been made available on GOV’s website (www.govreit.com) and will be filed with the Securities and Exchange Commission, or SEC.
The conference call telephone number is 877-328-1172. Participants calling from outside the United States and Canada should dial 412-317-5418. No pass code is necessary to access the call from either number. Participants should dial in about 15 minutes prior to the scheduled start of the call.
A live audio webcast of the conference call will also be available in a listen-only mode on GOV’s website, www.govreit.com. Participants wanting to access the webcast should visit GOV’s website about five minutes before the call. The transcription, recording and retransmission in any way of GOV’s conference call are strictly prohibited without the prior written consent of GOV.
About Government Properties Income Trust
GOV is a real estate investment trust, or REIT, which primarily owns properties located throughout the United States that are majority leased to the U.S. government and other government tenants. GOV is managed by the operating subsidiary of The RMR Group Inc. (Nasdaq: RMR), an alternative asset management company that is headquartered in Newton, Massachusetts.
The expected offering of GOV’s common shares will be made pursuant to GOV’s effective shelf registration statement filed with the SEC. The offering will be made only by means of a prospectus and a related preliminary prospectus supplement. Before you invest, you should read the prospectus in that registration statement, the related preliminary prospectus supplement and other documents GOV has filed or will file with the SEC for more complete information about GOV and the offering. You may get these documents for free by visiting the SEC’s website at www.sec.gov. Alternatively, GOV or any underwriter participating in the offering will arrange to send you the prospectus and the related preliminary prospectus supplement if you request it from Citigroup, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, telephone: (800) 831-9146; BofA Merrill Lynch, Attention: Prospectus Department, NC1-004-03-43, 200 North College Street, 3rd Floor, Charlotte, NC 28255-0001, email: dg.prospectus_requests@baml.com; Morgan Stanley, Attention: Prospectus Department, 180 Varick Street, 2nd Floor, New York, NY 10014; or UBS Investment Bank, Attention: Prospectus Department, 1285 Avenue of the Americas, New York, NY, 10019 or by calling (888) 827-7275.
This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of any securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
This press release is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell FPO common shares. We have not commenced a tender offer for FPO common shares pursuant to the terms of the merger agreement described herein or otherwise. If we commence a tender offer for FPO common shares, we will file with the SEC a tender offer statement on Schedule TO, and FPO will file with the SEC a solicitation/recommendation statement on Schedule 14D-9 with respect to such tender offer. ANY SUCH TENDER OFFER MATERIALS (INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER OFFER DOCUMENTS) AND THE SOLICITATION/RECOMMENDATION STATEMENT OF FPO ON SCHEDULE 14D-9 WILL CONTAIN IMPORTANT INFORMATION. HOLDERS OF FPO COMMON SHARES SHOULD READ THESE DOCUMENTS CAREFULLY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION THAT HOLDERS OF FPO COMMON SHARES SHOULD CONSIDER BEFORE MAKING ANY DECISION REGARDING TENDERING THEIR SECURITIES. Copies of these documents, if and when filed with the SEC, will be available free of charge at the SEC’s website at www.sec.gov. In addition to these documents, FPO files annual, quarterly and current reports and other information with the SEC. You may read and copy any reports or other information filed by FPO at the SEC public reference room at 100 F Street, N.E., Washington, D.C. 20549. FPO’s filings with the SEC are also available for free at the SEC’s website at www.sec.gov.
WARNING CONCERNING FORWARD LOOKING STATEMENTS
THIS PRESS RELEASE CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO, WHENEVER GOV USES WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE”, “WILL”, “MAY” AND NEGATIVES OR DERIVATIVES OF THESE OR SIMILAR EXPRESSIONS, GOV IS MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON GOV’S PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY GOV’S FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE:
THE INFORMATION CONTAINED IN GOV’S FILINGS WITH THE SEC, INCLUDING UNDER THE CAPTION “RISK FACTORS” IN GOV’S PERIODIC REPORTS, OR INCORPORATED BY REFERENCE THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE GOV’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN OR IMPLIED BY GOV’S FORWARD LOOKING STATEMENTS. GOV’S FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC’S WEBSITE AT WWW.SEC.GOV.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.
EXCEPT AS REQUIRED BY LAW, GOV DOES NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
A Maryland Real Estate Investment Trust with transferable shares of beneficial interest listed on the Nasdaq.
No shareholder, Trustee or officer is personally liable for any act or obligation of the Trust.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170628005460/en/
Government Properties Income TrustChristopher Ranjitkar, 617-219-1473Director, Investor Relations
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