What happened?
Shares of WPT Industrial REIT (TSX:WIR.UN) soared during early morning trading on August 9. Investors were greeted on Monday morning with the news that the light industrial property REIT would be acquired by Blackstone (NYSE:BX) in a US$3.1 billion transaction.
The news sent shares of both companies climbing. WPT Industrial shares were already up 37% in the last year, and Blackstone by 125%. While the news sent WPT Industrial shares up, Blackstone remained relatively stable from the acquisition news.
So what?
It’s really no wonder that WPT Industrial became a target of acquisition. Since coming on the market, WPT Industrial latched onto the e-commerce boom. Its light industrial properties allow e-commerce giants to store and ship products around the world. The company holds 110 properties across the United States, recently investing in a joint venture that added 13 properties valued at $370 million.
This came during yet another strong earnings report. The company collected 99.8% of billed rent for the quarter, and funds from operations (FFO) rose by 62% year over year. Whether the pandemic continues or not, WPT Industrial didn’t look like it would be shrinking its revenue any time soon. E-commerce should continue thriving in the next decade and beyond, so it’s clear why a company like Blackstone would be interested.
Now what?
Blackstone purchased WPT Industrial at US$22 per share, valued at US$3.1 billion, and will assume the company’s debt. The share price is where investors should really zero in, as this is a 17.1% premium to where the stock closed on the TSX on August 6. It’s also a 19.5% premium compared to the last 30 days of trading.
The company expects the transaction to close by the fourth quarter of 2021. WPT Industrial will deliver second-quarter earnings on August 11 — so this Wednesday. This news coupled with another strong quarter could allow the company to reach that premium price tag. If Motley Fool investors are looking for a stock to watch, this most definitely would be one I would consider for a quick jump around earnings on top of the recent movement. And you can still get in on a strong dividend yield of 4.05% while you’re at it.
