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: Singapore’s GIC and Oak Street acquire REIT Store Capital in ‘monster’ $14 billion all-cash deal

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Singaporean sovereign fund GIC and Oak Street on Thursday agreed to acquire real estate investment trust Store Capital Corp. in an all-cash deal valued at about $14 billion, sending the REIT’s shares up about 20%.

Scottsdale, Arizona-based Store Capital invests in single tenant operational real estate and has a portfolio of more than 3,000 property locations across the U.S. Oak Street is a unit of Blue Owl Capital, a leading net lease investor.

Under the terms of the deal, Store Capital’s shareholders will receive $32.25 for each share owned, equal to a premium of 20.4% over the stock’s closing price on Wednesday, and a premium of 17.8% over the 90-day volume weighted average stock price through that date.

The deal is expected to close in the first quarter of 2023. The agreement includes a 30-day “go-shop” period, during which Store Capital can solicit competing bids. Once the deal is completed, the stock
STOR,
+19.97%

will no longer trade on an exchange.

“As one of the largest dedicated U.S. net lease real estate companies in a nearly $4 trillion-dollar market, STORE Capital is a strong addition to GIC’s diverse portfolio of U.S. real estate investments,” said Adam Gallistel, Head of Americas Real Estate, GIC, in a statement.

“We are confident the company will continue its trajectory of accretive growth by meeting the demand for long-term financing solutions from middle market U.S. companies.”

Scott Merkle, managing partner for SLB Capital Advisors, a real estate advisory company specializing in sale leasebacks, said the deal is significant.

“In the normally staid net lease real estate world, this is a monster transaction that, if consummated, will result in the take-private of the third largest publicly traded net lease REIT,” Merkle said in emailed comments. “GIC and Oak Street are acquiring one of the most prolific sale leaseback investors that regularly deploys well north of $1 billion a year.”

Net leases are commercial real estate leases in which a tenant pays for space as well as additional costs relating to the operation, maintenance and use of the property, costs that would usually be covered by a landlord.

GIC has been particularly active in U.S. real estate, said Merkle, and today’s deal is the second in the U.S. net lease sector following the creation of a new net lease retail real estate platform in 2021 with RPT Realty.

The deal is the latest consolidation move in the sector, coming after Realty Income acquired Vereit in 2021 in an $11 billion deal.

“While sale leasebacks are not immune to broader market choppiness, it continues to be an outstanding time for corporate owners of real estate to consider monetizing owned facilities,” said Merkle.

Store Capital shares have fallen 6% in 2022 to date, while the S&P 500
SPX,
-0.28%

has fallen 17%.

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