Starwood to buy BCPT for £673m

Starwood Capital Group is set to buy Balanced Commercial Property Trust in a £673m deal. The recommended takeover, made via Starwood’s Starlight vehicle, will give BCPT shareholders 96p per share, a near-25% premium to their three-month average and an 8.7% discount to net asset value. BCPT, managed by Columbia Threadneedle, had undergone a strategic review, having faced what the takeover parties now call “significant challenges with a difficult economic and property market backdrop in a higher interest rate environment”. “Given BCPT’s scale and constrained access to capital, Starwood believes that the full potential of the business is best achieved as a private company under the control of Starwood as this will enable BCPT to realise maximum value from its portfolio,” Starwood said. Paul Marcuse, chairman of BCPT, said: “Over the course of the strategic review, we have undertaken an open consultation process with shareholders and the BCPT board is grateful for the constructive feedback. We note that a significant proportion of the share register expressed to us a clear preference for a liquidity event, either via a sale or a managed wind-down. “We believe that the proposed transaction with Starwood offers a successful outcome for our shareholders, offering a full cash exit at a significant premium to BCPT’s undisturbed share price.” A spokesperson for Columbia Threadneedle criticised the agreed deal, saying: “We have continually repositioned the [BCPT] portfolio through market cycles towards high quality assets which we believe represent excellent value creation opportunities. In our view the current portfolio is well positioned to take advantage of an improving market environment, with lower interest rates, pricing stability and improving sentiment. This value, along with the reduction in the discount over the past year from over 40% to under 20%, is recognised in the offer that has been received by the BCPT board. “We are disappointed by the board’s decision to recommend the offer, as we believe there remains considerable upside to the portfolio of assets, particularly at this point in the market cycle, which we would like all long-term shareholders to benefit from.” Photo © Stuart Bailey/Pixabay