Real estate firm sold for $5.6 billion

CarrAmerica, one of the Washington area's largest commercial real estate owners, said yesterday it would be bought for $5.6 billion.

New York private equity firm Blackstone Group said purchasing CarrAmerica would allow it to expand its office property holdings.

CarrAmerica's portfolio has grown substantially in recent years in the 12 metropolitan areas where it owns commercial property, said Thomas A. Carr, the company's chief executive officer.

"And yet, with our most aggressive performance assumptions, we don't believe we could match the value being offered to our shareholders today by this offer," Mr. Carr said.

Blackstone would acquire all the outstanding common stock of CarrAmerica for $44.75 per share in cash. CarrAmerica's stock closed yesterday at $44.53 per share on the New York Stock Exchange, up $3.45 from Friday's close, or 8.4 percent.

The Carr family traces its real estate roots in Washington to 1885, when Solomon Carr started a homebuilding company.

His descendants founded a real estate company in 1962 that switched names several times before adopting CarrAmerica in 1996 as it expanded its holdings nationally.

CarrAmerica owns 285 operating office properties, totaling about 26.3 million square feet, either by itself or through joint ventures.

In the Washington area, the properties include the International Square buildings at 19th and K streets Northwest, Terrell Place on Seventh Street next to the newly named Verizon Center, and four office buildings on the 1700 block of Pennsylvania Avenue.

The acquisition "will provide us with a valuable platform for future investments in the office sector," said Jonathan Gray, senior managing director of the Blackstone Group.

CarrAmerica will still operate under its own name after the acquisition, but it will be a privately owned company.

"They're a historic Washington company," said Mary Petersen, senior adviser for Cassidy & Pinkard, a commercial real estate firm. Her company leases buildings for CarrAmerica.

The acquisition by Blackstone Group is "part of a trend," Mrs. Petersen said. "There's just a lot of capital coming into real estate. They're looking for different ways to put it to work."

Blackstone has spent $21 billion on seven major acquisitions in the past two years, including the CarrAmerica purchase.

It invests in a variety of businesses, such as Allied Waste, publisher Houghton Mifflin, TRW Automotive and Universal Orlando, but its recent acquisitions have focused on the hotel industry.

Last month, Blackstone Group said it would buy Bethesda hotel owner MeriStar Hospitality Corp. for $2.6 billion. Its other major acquisitions in the past two years include hotel chains Wyndham International Inc. for $1.44 billion, La Quinta Properties Inc. for $2.28 billion and a $5.1 billion purchase of Extended Stay America, Prime Hospitality and Boca Resorts.

John Ford, Blackstone spokesman, declined to discuss details of the CarrAmerica acquisition, saying, "We're in a fairly delicate situation" until the deal is closed, which is expected in the second quarter after a vote by CarrAmerica shareholders.