Bluerock Residential Growth REIT Stock (BRG): Why The Price Surged Today

By Amit Chowdhry ● Dec 20, 2021
  • The stock price of Bluerock Residential Growth REIT Inc (NYSEAMERICAN: BRG) increased by 76.17% today. This is why it happened.

The stock price of Bluerock Residential Growth REIT Inc (NYSEAMERICAN: BRG) increased by 76.17% today. Investors are responding to Bluerock Residential Growth REIT announcing that it has entered into a definitive agreement with affiliates of Blackstone Real Estate under which Blackstone will buy all outstanding shares of common stock of BRG for $24.25 per share in an all-cash transaction valued at $3.6 billion.

Under the terms of the deal, Blackstone will buy 30 multifamily properties comprising approximately 11,000 units as well as a loan book secured by 24 multifamily assets. And the properties consist of high-quality garden-style assets with significant green space and resort-style amenities. And the majority of the properties are located in Atlanta, Phoenix, Orlando, Denver, and Austin.

Prior to the acquisition, Bluerock separately intends to spin off its single-family rental business to its shareholders through the taxable distribution to shareholders of all of the outstanding shares of common stock of a newly formed real estate investment trust named Bluerock Homes Trust, Inc. (BHOM) – which will be externally managed by an affiliate of Bluerock Real Estate. 

BHOM will own interests in about 3,400 homes, including 2,000 through preferred/mezzanine investments, located in high quality of life and knowledge economy markets across the U.S. And the company’s shareholders will receive shares of BHOM with a current implied Net Asset Value estimated at $5.60 (based on the midpoint of the valuation range provided by Duff & Phelps, independent financial advisor to the company’s board of directors), for each share of company common stock. But there can be no assurance that the trading price upon a listing of BHOM will be equal to or greater than this estimated NAV.

The deal has been unanimously approved by Bluerock’s board of directors and the acquisition (excluding the value of BHOM), represents a premium of approximately 124% over the unaffected closing stock price on September 15, 2021, the date prior to a media article reporting that the company was exploring strategic options including a sale.

The completion of the acquisition – which is currently expected to occur in the second quarter of 2022 – is contingent upon the consummation of the spin-off, as well as customary closing conditions, including the approval of the company’s shareholders, who will vote on the transaction at a special meeting on a date to be announced. The acquisition is not contingent on receipt of financing by Blackstone.

KEY QUOTES:

“We are very proud to enter into a transaction that delivers tremendous value to our shareholders. We believe the substantial premium to our historic trading price is a testament to our success in building a best-in-class institutional-quality multifamily apartment portfolio in our attractive knowledge-economy target markets, along with the robust process run by the board of directors and management to secure maximum value for our shareholders.” 

— Ramin Kamfar, Company Chairman and CEO

“Bluerock’s portfolio consists of high-quality multifamily properties in markets across the U.S. experiencing some of the strongest fundamentals. We look forward to bringing our best-in-class management to these properties to ensure they continue to be operated at the highest standards for the benefit of tenants and the surrounding communities.”

— Asim Hamid, Senior Managing Director at Blackstone Real Estate

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.