|6 Months Ended|
Jun. 30, 2022
|Business Combination and Asset Acquisition [Abstract]|
|Merger Events||Merger Events
On April 24, 2022, PSB and the OP entered into the Merger Agreement with Sequoia Parent LP, a Delaware limited partnership (“Parent”), Sequoia Merger Sub I LLC, a Maryland limited liability company (“Merger Sub I”), and Sequoia Merger Sub II LLC, a Maryland limited liability company (“Merger Sub II,” together with Parent and Merger Sub I, the “Parent Parties”). The Parent Parties are affiliates of Blackstone Real Estate Partners IX L.P. (the “Guarantor”), which is an affiliate of Blackstone. Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, at the closing of the Mergers (as defined below), Merger Sub II will merge with and into the OP (the “Partnership Merger”), and, immediately following the Partnership Merger, Merger Sub I will merge with and into PSB (the “Company Merger” and, together with the Partnership Merger, the “Mergers”). Upon completion of the Partnership Merger, the Partnership will survive and the separate existence of Merger Sub II will cease. Upon completion of the Company Merger, PSB will survive and the separate existence of Merger Sub I will cease. As required pursuant to the terms of the Merger Agreement, the OP has been converted from a California limited partnership into a Maryland limited partnership.
Subject to the terms and conditions set forth in the Merger Agreement, in the Mergers each share of the Company’s common stock and each common unit of partnership interest of the OP, respectively, subject to certain exceptions specified in the Merger Agreement, will be converted into the right to receive an amount in cash equal to $187.50, less the amount of the Closing Cash Dividend (as described below), without interest. Each share of PSB’s outstanding preferred stock (and each depositary share representing an interest therein) will remain outstanding in accordance with their respective terms.
On July 8, 2022, the Company announced that, in accordance with the Merger Agreement, the Board declared (i) a prorated quarterly cash dividend on the Company’s common stock and (ii) a cash dividend (the "Special Cash Dividend") of $5.25 per share of the Company’s common stock, each payable immediately before the effective time of the Partnership Merger, to holders of record as of the close of business on the business day immediately preceding the closing of the Mergers and contingent upon the approval of the Company Merger by the Company’s stockholders, the satisfaction or waiver of the other conditions to the Mergers, and the Merger Agreement not having been terminated. The amount of the pro rata dividend is based upon the Company’s current quarterly dividend rate of $1.05 per share of Company common stock and pro-rated for the number of days from and including July 1, 2022 through the day immediately prior to the closing date of the transaction. Based on the anticipated closing date of the transaction of July 20, 2022, the pro rata dividend will equal $0.216848 per share of Company common stock, and each of the pro rata dividend and the Closing Cash Dividend will be payable immediately prior to the partnership merger effective time on July 20, 2022 to the holders of record as of the close of business on July 19, 2022.
If the transaction is completed on July 20, 2022, Company stockholders who hold their shares of common stock on the record date for the dividends and through the effective time of the Company merger will be entitled to receive an aggregate of $187.716848 per share in cash, consisting of (i) $187.50, representing the $5.25 closing cash dividend and the merger consideration of $187.50 per share as reduced by the $5.25 closing cash dividend plus (ii) the $0.216848 pro rata dividend.
If the closing date of the transaction is delayed past July 20, 2022, holders of the Company’s common stock will not receive the pro rata dividend or the closing cash dividend on July 20, 2022, and in such case the Company will make a public announcement providing further updates with respect to these matters.
The consummation of the Mergers is subject to certain customary closing conditions. A termination fee of up to $220.0 million may be payable by the Company if the Merger Agreement is terminated in certain specified circumstances, as more fully described in the Merger Agreement. A termination fee of $735.0 million may be payable by Parent if the Merger Agreement is terminated in certain other specified circumstances, as more fully described in the Merger Agreement.
In connection with the transaction, the Company, Blackstone and PS entered into a support agreement, pursuant to which PS voted its common equity interests in the Company and the OP in favor of adopting the Merger Agreement and approving the Mergers and the transactions contemplated thereby. The support agreement will automatically terminate in certain cases, including upon the termination of the Merger Agreement in accordance with its terms. As of April 21, 2022, PS held approximately 25.9% of the issued and outstanding shares of common stock of the Company and 20.9% of the issued and outstanding common units of partnership interest of the OP.
In connection with the transaction, the Company recorded Merger related costs of $6.1 million, in general and administrative expenses, for professional fees and investor related services.
The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef