Analysts suggested Equity Office Properties may have paid a premium as much as 12% for the Menlo Park, CA-based REIT with a strong presence on the West Coast. "Our focus was cash flow, our focus was tenant relationships and our focus was long-term value to our stockholders," Zell says.
The immediate market reaction Feb. 23 was negative for Equity Office Properties, as its stock fell 2.5% Feb. 23, the day the deal was announced. Meanwhile, Spieker Properties stock jumped 5.9%, within striking distance of the $58 a share value placed on Spieker stock under terms of the deal. Equity Office Properties bounced back 1% in early trading Monday.
The deal also shifts the focus of Equity Office Properties. While it makes the REIT No. 1 or No. 2 in nine of the top 10 markets, it also will see 40% of its net operating income coming from the West Coast. It also will become more of a suburban office REIT, as 58% of its portfolio will be outside Central Business Districts, rather than the current 50-50 split.
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