A unit of Brookfield Asset Management Inc. agreed to buy U.S. apartment landlord Associated Estates Realty Corp. in a deal valued at $2.5 billion, including debt. After trying to fend off a proxy battle with activist hedge fund and investment manager Land and Buildings, Cleveland, OH-based apartment landlord Associated Estates Realty Corp. agreed to sell itself to a real estate fund managed by Toronto-based Brookfield, according to a CoStar report.
"Today's announcement marks the beginning of a new chapter in the history of Associated Estates. The transaction will deliver compelling, immediate and certain value to all Associated Estates shareholders while also positioning our company to take advantage of exciting growth opportunities," Jeffrey Friedman, chairman & CEO of Associated Estates, wrote in a letter to employees dated April 22.
Investor Jonathan Litt's Land & Buildings Investment Management LLC said in June the trust's apartment portfolio was not best-suited for public markets and the company should sell itself to Litt's firm or another buyer. Land & Buildings owns a 2.23 percent stake in the trust, according to Thomson Reuters data. The offer of $28.75 per share is at a premium of 17.4 percent to Associated Estates' Tuesday closing price.
Completion of the transaction is contingent upon customary closing conditions. The transaction is not contingent on receipt of financing by Brookfield.
Closing is expected to occur in the second half of 2015. Associated Estates' headquarters will remain in Richmond Heights, Ohio.
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