Private Equity News & Analysis

Vornado enters Equity Office fray

US real estate trust Vornado has reportedly joined the consortium mulling a counter-bid for Equity Office.

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Vornado Realty Trust, a US-listed real estate trust, has reportedly thrown its weight behind the proposed counter-bid for Equity Office Properties, which had been expected to be acquired by Blackstone in a $36 billion (€28 billion) deal.

The Financial Times, citing people familiar with the matter, reports that Vornado has joined the consortium of investors led by alternative asset manager Cerberus. The group, which also includes real estate investment groups Starwood Capital and Walton Street Capital, is considering a counter-bid for Equity Office, a commercial real estate group listed on the New York Stock Exchange.

In November, Blackstone agreed to pay $19 billion for Equity Office, while assuming the company’s $17 billion of debt. The firm has already lined up Goldman Sachs, Bear Stearns, Bank of America and Morgan Stanley to advise on and finance the bid, while Merrill Lynch is providing advice to Equity Office.

This means the Cerberus-led group would need to rely on other banks to put together a debt package to finance its counter-bid. Analysts have speculated that any bid, if it arrives, could be worth $50 to $52 a share, trumping Blackstone’s current offer of $48.50 a share.

At $36 billion, the Equity Office deal is already the biggest buyout to date. The entry of a new bidder may push this price up even higher.

Vornado is no stranger to private equity, having previously joined forces with Kohlberg Kravis Roberts and Bain Capital for the $6.6 billion acquisition of Toys ‘R’ Us, a US retail chain.