Why WPT Industrial (TSX:WIR.UN) Jumped 16% Overnight!

A major deal had shares of WPT Industrial REIT (TSX:WIR.UN) soaring by almost 16% in morning trading, so what happened exactly?

Amy Legate-Wolfe

Author Bio

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband.

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“October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published August 9, 2021 11:28 am EDT

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.