Alternative investment manager Ares Management Corp. said on Thursday that it has agreed to acquire Houston-based Whitestone REIT for $19 a share, or about $1.7 billion, in cash.
Kirkland & Ellis is outside legal advisor to Ares. The Kirkland team included Austin Partner Emily Lichtenheld and Jonathan Benloulou, a partner who works from the Dallas and Los Angeles offices. New York Partners Michelle Kelban and Natasha Shah, as well as Los Angeles Partner Daniel Elizondo also advised. Naseem Sagati Aghili is the Ares Management Corp.’s general counsel.
Bass Berry & Sims, based in Nashville is outside legal advisor to Whitestone, whose general counsel is Peter A. Tropoli.
David Roth, global head of real estate at Ares, said the acquisition further diversifies the company’s holdings “with necessity-based retail centers in high-demand, supply-constrained metro regions across Arizona and Texas,” and reflects the firm’s “high conviction in New Economy real estate.”
“Today’s consumers are increasingly seeking convenient experiences for their grocery, pharmacy, healthcare, fitness and dining needs,” Roth said. “We are confident in Ares’ ability to support and expand on the Whitestone portfolio and create value for both communities and investors.”
Whitestone’s portfolio includes 56 convenience-focused retail properties with about 4.9 million square feet in Phoenix, Austin, Dallas, Fort Worth, Houston, San Antonio and elsewhere.
“Whitestone has shown the value of high-return smaller spaces occupied by a well-diversified mix of tenants,” CEO Dave Holeman said. “Our investment strategy is designed to allow businesses to fuel connection and convenience within thriving, dynamic communities. We believe this transaction with Ares is a testament to the value that strategy has created for our business and, ultimately, for our shareholders.”
Whitestone said the purchase price represents a 12.2 percent premium to its closing price of $16.94 on April 8 and a 26.5 percent premium to its share price on March 5, when it was disclosed that the company was exploring a sale. Whitestone hired BofA Securities and Jones Lang LaSalle as financial advisors on the deal. Citigroup Global Markets is lead financial advisor to Ares with Morgan Stanley also advising.