(BX) Blackstone Group LP to Buy Capital Trust Unit

The Blackstone Group LP (BX) has reached an agreement with real estate finance company – Capital Trust, Inc. (CT) – to acquire the latter’s investment unit. Further, the company is set to purchase 18.2% stake in Capital Trust, giving it the corresponding managerial rights. Overall, Blackstone will shell out approximately $30 million for this deal.

CT Investment Management Co., LLC (CTIMCO) – a wing of Capital Trust, which administers its investment management operations– will be bought over by an affiliate of Blackstone – Blackstone’s Real Estate Debt Strategies (BREDS) – for a sum of $20 million. Moreover, along with the acquisition of the investment management unit, Blackstone will purchase five million shares of newly issued Capital Trust common stock at a price of $2.00 per share.

Concurrent with the deal, Capital Trust is expected to announce a special cash dividend. The dividend will be paid as soon as possible, subject to approval from the shareholders. The dividend will be funded through the available cash in hand, prior to the transaction, and the sales proceeds from CTIMCO as well as related fund co-investments.

Recent Acquisitions

Earlier this month, Blackstone made an agreement to buy Vivint Inc – a security provider that offers home automation and technology services – for a sum of about $2 billion. The deal is anticipated to conclude by the end of the current year.

Further, Blackstone announced that it would acquire GCA Services Group from Nautic Partners, L.L.C. and other minor shareholders. The deal, which is anticipated to be completed in October this year, is subject to certain approvals by the government and other specific closing conditions.

Our Viewpoint

We believe that the acquisition of the investment management operations unit of Capital Trust will bolster Blackstone’s asset management and servicing potential and will also enhance its commercial real estate debt platform. Recently, Blackstone has announced a string of acquisitions, which reflects its strong liquidity. These acquisitions have the capacity to fuel Blackstone’s overall growth in the future.

The shares of Blackstone currently retain a Zacks #3 Rank, which translates into a short-term Hold rating.

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