Brookfield To Pay $1.2B For Industrial Outdoor Storage REIT
Brookfield Asset Management is spending $1.2B to buy hundreds of acres worth of outdoor storage space.
The New York-based investment giant reached a $21-per-share deal to buy Peakstone Realty Trust, a REIT with 60 industrial outdoor storage properties and 16 traditional industrial assets. The purchase price is a 34% premium on Peakstone’s public valuation as of Friday.
Peakstone’s board of directors approved the buyout, which is expected to close by the middle of the year, pending shareholder approval. The deal includes a 30-day window for Peakstone to market its properties for a higher return. The definitive agreement’s outside date, effectively when it expires if it hasn't closed, is Aug. 2.
The REIT will stop paying its quarterly dividend while the deal is finalized and won’t hold a fourth-quarter conference call when it releases its 2025 financials in late February, according to a release.
BAM, which is publicly traded but majority-owned by Canadian investment giant Brookfield Corp., agreed to pay a 51% premium to Peakstone's 90-day volume-weighted average price to close the deal.
The REIT’s stock jumped more than 30% to just under the buyout price Monday morning.
The properties will bolster Brookfield’s industrial portfolio and benefit from long-term tailwinds promoting growth in the warehouse and industrial outdoor storage sectors, Lowell Baron, CEO of Brookfield’s real estate business, said in a statement.
Peakstone, which has offices in El Segundo, California, and Chicago, first pushed into the industrial outdoor storage, or IOS, sector with the November 2024 purchase of a 51-property portfolio valued at $490M. The assets, sold by a joint venture between Alterra IOS and J.P. Morgan Asset Management, comprised 45 properties spanning 440 acres in 14 states and six redevelopment sites totaling 82 acres.
The following November, the REIT announced it was exiting the office sector to pivot into a pure-play industrial firm with a focus on IOS. By the end of the third quarter, it had sold eight office assets for a combined $248M, sold four others for an undisclosed sum and was marketing its remaining 12 office properties, the company disclosed in its third-quarter reporting.
At least one of those properties traded for a steep discount. Peakstone sold a Denver-area office in November for $32M, down from the $92M it paid in 2014.
The IOS sector has been a quiet growth engine inside the broader industrial space for years. Rents have grown 123% in the last five years, according to Newmark, and the sector is drawing increasing interest from institutional investors as alternative asset purchases become more popular.
BAM has more than $1T in assets under management. Its stock was up modestly in early trading Monday, but it has shed more than 10% of its value in the last 12 months.
The asset management behemoth and its parent company also cut a deal in October to pay roughly $3B in cash to buy the remaining quarter of private credit giant Oaktree Capital Management that it didn't already own.
BAM’s Toronto-based parent company was a major buyer of office buildings before the pandemic and has taken significant losses as it rebalances its portfolio, including through discounted sales of assets once valued at $3B.
