Blackstone Real Estate and MRP Group Increase Price of All-Cash Tender Offer for Terrafina

Rhea-AI Summary

Blackstone Real Estate and MRP Group have increased their all-cash tender offer for Terrafina's real estate trust certificates to Ps.40.50 per certificate, up by Ps.1.00. This offer represents a 27% premium over the December 4, 2023 closing price and more than 10% over the June 7, 2024 price. The tender offer provides immediate value to shareholders, avoiding potential tax consequences from competing offers. The Mexican antitrust authority, COFECE, has approved the offer, which does not require financing conditions or additional approvals. The offer expires on July 24, 2024, with settlement expected by July 31, 2024, contingent upon acceptance by holders of at least 50% plus one of the outstanding certificates.

Positive

• Increased offer price to Ps.40.50 per certificate.
• 27% premium over the December 4, 2023 closing price.
• More than 10% premium to the June 7, 2024 price.
• Immediate and certain value for Terrafina shareholders.
• COFECE has unconditionally approved the tender offer.
• No financing conditions or additional board/shareholder approvals required.

Negative

• Acceptance by holders representing at least 50% plus one of the outstanding certificates is required for completion.

Insights

Financial Analyst

The increase in the tender offer price to Ps.40.50 per certificate is significant, as it represents a 27% premium over the unaffected price and a more than 10% premium over the recent closing share price. This is likely to incentivize more shareholders to tender their certificates, providing a substantial, immediate monetary benefit. The fact that the offer is all-cash reduces the risk for shareholders compared to other potential exchange offers, which might carry uncertain tax implications. By providing a clear and immediate benefit and with the antitrust approval already secured, the offer's structure appears favorable for shareholders seeking a quick exit with a premium.

For the long-term outlook, Blackstone Real Estate's track record of over 50 successful public company transactions signals confidence in their ability to execute such deals efficiently. This can reassure Terrafina shareholders about the reliability and finality of the offer. Retail investors should consider the immediate cash benefit against the potential for future gains if Terrafina were to remain independent or entertain other offers.

However, it's worth noting that the tender offer is contingent upon the acceptance by holders of at least 50% plus one of the outstanding certificates. This condition introduces uncertainty, as failure to meet this threshold could derail the offer.

Real Estate Market Analyst

From a real estate market perspective, Blackstone Real Estate and MRP Group's increased tender offer highlights strategic interest in the Mexican real estate sector. The premium offered reflects their confidence in the underlying value of Terrafina’s assets. Investors should note that such strategic acquisitions often signal a bullish outlook on the market or specific segments, in this case, industrial real estate trusts (FIBRAs). Given Mexico's growing appeal as a regional manufacturing and logistics hub, this move aligns with the broader market trends.

Additionally, the involvement of Blackstone, a globally recognized real estate investor, underlines the attractiveness of Terrafina’s portfolio. This could have positive implications for the valuation of similar real estate assets in the region, potentially driving up market sentiment and valuations.

However, retail investors should be mindful of potential risks associated with real estate investments, such as market fluctuations and changes in regulatory or tax environments, which could impact the overall returns.

Only announced all-cash offer to date, providing substantial, immediate and certain value to Terrafina shareholders

NEW YORK & MEXICO CITY--(BUSINESS WIRE)-- Blackstone Real Estate and MRP Group, a developer, owner and operator of real estate in Mexico, today announced that a Mexican trust formed by their affiliates has increased the price of its tender offer for up to 100% of the outstanding real estate trust certificates of Terrafina (BMV:TERRA 13) by Ps.1.00 per certificate to a purchase price of Ps.40.50 per certificate.

The all-cash tender offer represents a premium of 27% over the unaffected price per Terrafina certificate at the close of trading on December 4, 2023 and a more than 10% premium to Terrafina’s closing share price on June 7, 2024.

As the only announced all-cash tender offer, this transaction would provide substantial and immediate value for Terrafina’s shareholders and avoids the uncertainty regarding the potential tax consequences associated with competing exchange offers. The potential negative tax consequences include a 30% withholding tax on the annual taxable income of the subsidiary FIBRA, potentially leading to taxation for tax-exempt investors and double taxation for non-exempt investors.

With a track-record of over 50 successful public company transactions, Blackstone Real Estate is well-positioned to execute this transaction. The Mexican antitrust authority, the Comisión Federal de Competencia Económica (COFECE), has unconditionally approved the tender offer. The tender offer is not subject to any financing condition and is not contingent on additional board or shareholder approvals.

Terrafina certificates may be tendered at any time until 14:00 Mexico City time, on July 24, 2024, unless the expiration date is extended in accordance with the Offer to Purchase referred to below. The settlement date is expected to be July 31, 2024, unless the expiration date is extended in accordance with the Offer to Purchase. The completion of the tender offer is conditioned upon, among other things, the acceptance by holders representing at least 50% plus one of the outstanding Terrafina certificates (including, for the avoidance of doubt, any approved but unissued Terrafina certificates).

These changes to the terms of the tender offer do not result in withdrawal rights.

Complete terms and conditions of the tender offer are set forth in the Offer to Purchase as supplemented by the Supplemental Notice (Aviso de Oferta). Please see below for information on how to obtain the Offer to Purchase and the accompanying Letter of Acceptance, and for who to contact with any questions regarding the tender procedures.

About Blackstone Real Estate

Blackstone is a global leader in real estate investing. Blackstone’s real estate business was founded in 1991 and has US $339 billion of investor capital under management. Blackstone is the largest owner of commercial real estate globally, owning and operating assets across every major geography and sector, including logistics, residential, office, hospitality and retail. Our opportunistic funds seek to acquire undermanaged, well-located assets across the world. Blackstone’s Core+ business invests in substantially stabilized real estate assets globally, through both institutional strategies and strategies tailored for income-focused individual investors including Blackstone Real Estate Income Trust, Inc. (BREIT), a U.S. non-listed REIT. Blackstone Real Estate also operates one of the leading global real estate debt businesses, providing comprehensive financing solutions across the capital structure and risk spectrum, including management of Blackstone Mortgage Trust (NYSE: BXMT).

About MRP Group

MRP Group was founded in 2003 and is a leading integrated platform focused on managing institutional capital in the Mexican real estate sector. To date, MRP Group has committed and managed investments of more than $4.8 billion through 14 funds. MRP Group is a development and operationally-focused entity comprised of professionals specializing in the evaluation, planning, financing, structuring, and execution of transactions within the cash-generating real estate asset space, all with a long-term vision. MRP Group is an active capital manager, directly involved in both the development, acquisition and operation of its projects and focused on commercial, hospitality and mixed-use properties, which has allowed it to obtain significant expertise.

About the Offeror

The tender offer is being made by CIBanco, S.A., Institución de Banca Múltiple, in its capacity as trustee under the trust identified with the number CIB/4338, of which BP MX Industrial Real Estate Holdco LLC and CIBanco, S.A. Institución de Banca Múltiple, in its capacity as trustee of the irrevocable management trust agreement identified under number CIB/4235, are settlors and beneficiaries.

Copies of Offer to Purchase and Tender Offer Queries

A copy of the Offer to Purchase and the Supplemental Notice (Aviso de Oferta) are available free of charge in English at the following link: https://www.cibanco.com/es/cibanco/busqueda-emisoras-fiduciario?stock=47&series=29&idArea=servicio-fiduciarios

If you have questions regarding the tender offer or tendering procedures, please contact:

• Morgan Stanley Mexico, Casa de Bolsa, S.A. de C.V., acting as Dealer Manager, at +52 55 5282 6748 or via email at Miguel.Perez@morganstanley.com; or

• Morrow Sodali, International LLC, acting as Information Agent, at +1 917 475 0281 or +1 800 269 4523 (in the United States) and +52 55 4169 6733 (in Mexico) or via email at opa@investor.morrowsodali.com.

Transaction Advisors

Morgan Stanley & Co and Santander are serving as financial advisors to Blackstone Real Estate and MRP Group. Simpson Thacher & Bartlett LLP and Galicia Abogados, S.C., are serving as legal advisors to Blackstone Real Estate and MRP Group.

Notice to Investors

This announcement is for information purposes only and does not constitute an offer or an invitation to acquire or dispose of any securities or investment advice or an inducement to enter into investment activity. The information in the press release is not intended to be complete. The tender offer is only being made pursuant to the Offer to Purchase. Holders of Terrafina certificates should read carefully the Offer to Purchase and accompanying documentation because they contain important information, including the terms and conditions of the tender offer.

This press release and any other document related to the tender offer may not be distributed, published, delivered and/or disseminated in any country where delivery and use would be contrary to applicable law. We have not authorized this press release or any other document related to the tender offer to be published, delivered, distributed and/or disseminated by third parties outside of Mexico or the United States. Therefore, recipients may not publish, distribute and/or disseminate this press release or any other document related to the tender offer outside of Mexico or the United States, unless in accordance with the applicable law.

Forward-Looking Statements

Certain statements in this press release may be considered “forward-looking statements.” Forward-looking statements are not guarantees of future performance. Any forward-looking statements contained herein are based on current expectations and assumptions. Forward-looking statements are inherently susceptible to uncertainty and changes in circumstances. Actual results may differ materially from the forward-looking statements as a result of a number of risks and uncertainties, many of which are outside our control. We do not undertake, or assume any obligation, to provide updates of or to revise any forward-looking statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240628601177/en/

Media

Blackstone:

Jeffrey Kauth

Jeffrey.Kauth@Blackstone.com

MRP:

Andrea González Chacón

agonzalezch@mrp.com.mx

Source: Blackstone Real Estate

FAQ

What is the new offer price for Terrafina certificates by Blackstone Real Estate and MRP Group?

The new offer price is Ps.40.50 per certificate.

How much premium does the new offer represent over Terrafina's December 4, 2023 closing price?

The new offer represents a 27% premium over the December 4, 2023 closing price.

When does the tender offer for Terrafina certificates expire?

The tender offer expires on July 24, 2024.

What approvals are required for the completion of the tender offer for Terrafina certificates?

The tender offer requires acceptance by holders representing at least 50% plus one of the outstanding certificates.

When is the expected settlement date for the tender offer of Terrafina certificates?

The expected settlement date is July 31, 2024.

Has the Mexican antitrust authority approved the tender offer for Terrafina certificates?

Yes, the Mexican antitrust authority, COFECE, has unconditionally approved the tender offer.