20050606 asloan
Allan Sloan - 


SCOTT JAGOW: One of the hottest properties on Wall Street is a property company. It's called Equity Office Properties. They have hundreds of office buildings around the country. Until last week, it looked like the buyout firm Blackstone Group would pay a ton of money and take this real estate company private. But then another group of investors made an even bigger offer. Newsweek's Allan Sloan is here. Allan, so what's so hot about Equity Office Properties?

ALLAN SLOAN: Well one reason it's attractive is that the price of commercial buildings, which is what this thing owns, keep going up and up and up. As people are willing to finance buildings at cheaper and cheaper rates, the value goes up and up and up. So here was a deal with Equity Office Properties that got an offer of $48.50 a share that seemed enormously high from a big private equity house and suddenly there's out there somebody jumping the bid. It's interesting.

JAGOW: Well the New York Times' take on this was that so far with all these private equity firms buying up everything in sight in the past couple years, things have been pretty cordial. And now this has the makings of a huge bidding war the likes of which we haven't seen since RJR-Nabisco's bidding war back in the '80s. What do you think of that?

SLOAN: Well I mean, this is what everybody would like to see because it would be a great story and give us a lot to write. I suspect that it's not going to work out that way and the reason is the offer on the table of $48.50 a share is all cash, which you know how to value, and I thin kit would be done in very early February and people would have their money. Here, 40 percent of the I think it's $52 is in the stock of another company called Vornado and the financing isn't in place so the question is, is $52 in the bush worth more than $48.50 in hand. Now I don't have an MBA but I suspect if it were me I'd probably vote take the money.

JAGOW: Is there anything else here that we should particularly care about?

SLOAN: Well I mean other than amusement value, this is just a sign of how much money is sloshing around in the world to do these deals, either by being the investor or by being the lender or both and that's a theme that I've sounded here to the point where people may be rolling their eyes and shrugging and saying 'why won't he shut up.' But it's still true. And it's just sloshing around and there's tens of billions of dollars of it and I'm just trying to figure out how to get some of it for myself. But that would be illegal

JAGOW: Alright Allan, thanks a lot.

SLOAN: Anytime Scott.

JAGOW: Allan Sloan is the Wall Street editor for Newsweek Magazine.