Ares Management has announced its acquisition of Whitestone REIT in a $1.7 billion all-cash transaction. This deal will take the shopping center-focused real estate investment trust private, marking a significant move in the current real estate market. Whitestone REIT’s portfolio, primarily located in Arizona and Texas, comprises 56 retail spaces.
Ares Management, a global alternative asset manager, is set to acquire Whitestone REIT, a Houston-based real estate investment trust (REIT) with a market capitalization of $971 million. The all-cash deal, valued at $1.7 billion, will see Whitestone REIT delisted from the New York Stock Exchange. This acquisition is expected to close in the third quarter.
Whitestone REIT’s portfolio consists of 56 retail properties, totaling 4.9 million square feet, with a strong concentration in the Phoenix area, as well as significant holdings in Houston, Dallas, Fort Worth, Austin, and San Antonio, Texas. The $1.7 billion purchase price reflects a 12.2% premium over Whitestone’s closing stock price on April 8 and a 26.5% premium compared to its stock value one month prior. Ares Real Estate’s global head of real estate strategy, David Roth, cited the REIT’s “necessity-based retail centers” in high-demand Southwestern metro areas as a key attraction, aligning with their focus on “new economy” real estate.
Industry analysts view this acquisition as indicative of a broader trend where private equity firms are targeting REITs. Many REITs have been trading below their net asset value, making them attractive acquisition targets. This deal follows other recent take-private transactions, such as Ares’ partnership in acquiring Plymouth Industrial REIT and Rithm Capital’s agreement to acquire Paramount Group. The acquisition of Whitestone REIT removes another small-cap REIT from the public market, a theme observed in recent mergers and acquisitions activity.
Whitestone REIT had previously fended off takeover attempts. In early 2024, Bruce Schanzer of Erez Asset Management sought to replace members of Whitestone’s board, citing concerns about alleged mismanagement and the issuance of equity at steep discounts. However, with the agreement to be acquired by Ares Management at a price reflecting a significant premium, the current deal appears to offer substantial value to Whitestone’s shareholders.