(Bloomberg) -- Pacific Investment Management Co. agreed to acquire landlord Columbia Property Trust Inc. for $3.9 billion including debt, betting that demand for offices will hold up as the pandemic spurs people to work from home.
Funds managed by Newport Beach, California-based Pimco will acquire all of Columbia's common stock for $19.30 a share in cash, according to a statement Tuesday. The company owns, operates and develops properties in New York, San Francisco, Washington and Boston, with a portfolio of 15 properties and four more projects under development.
The Covid-19 crisis has reshaped the way that Americans work, pushing employers to evaluate how much office space they require. Office tenants typically enter into long-term leases, which provided property owners with a measure of protection from the effects of the pandemic, at least in the short term. It remains unclear whether the pandemic will permanently reduce office demand.
“We continue to believe that high-quality office buildings in major U.S. cities offer long-term value for our clients and Columbia has assembled a modernized, well-located portfolio of assets that we expect will perform well in the years ahead,” John Murray, Pimco's global head of private commercial real estate, said in the statement.
In March, a group of investors made an unsolicited offer to acquire the company, and in April Columbia's board announced that it had engaged advisers to evaluate strategic options for the company. The agreement with Pimco “provides Columbia shareholders with immediate and certain cash value at a significant premium to the company's public-market valuation” and “represents the best outcome for all Columbia shareholders,” Constance Moore, chair of Columbia's board, said in the statement.
Shares of New York-based Columbia climbed 16% to $19.17 at 7:32 a.m. in early New York trading.
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