NEWTON, Mass. – Select Income REIT will spend about $2.7 billion in cash and stock to buy Cole Corporate Income Trust in a deal that adds 64 office and industrial properties to the real estate investment trust’s portfolio.
The transaction will give Select Income strategic distribution centres for companies like Amazon.com and headquarters locations for companies including Tesoro Corp. and Noble Energy Inc. Select Income said Tuesday the acquisition will expand its United States footprint to 35 states from 21 and diversify its tenants. The combined company will have more than 43 million square feet of real estate.
The acquisition totals about $3 billion, counting the assumption of mortgage debt.
Select Income also will sell 23 health care properties to Senior Housing Properties Trust for about $509 million once the Cole acquisition closes. That would knock the net purchase price of Cole for Select Income down to about $2.2 billion, not counting the mortgage debt.
Select Income will use proceeds from the health care properties sale to help pay for the Cole acquisition as well as a bridge loan and its revolving credit line.
The Cole acquisition is expected to close in next year’s first quarter, pending shareholder approval.
Select Income REIT was spun off from Commonwealth REIT and went public in 2012. The Newton, Massachusetts, company’s shares fell $1.32, or 4.7 per cent, to $26.58 in midday trading. They have risen more than 4 per cent so far this year.