In case you're keeping score, the retail REITbook popped over $20 billion. Three weeks after Simon Property Group reached a deal to buy Mills Corp. for $7.9 billion and the same day Developers Diversified Realty Corp. closed on its previously announced $6.2-billion takeover of Inland Retail Real Estate Trust Inc., Australia-based Centro Properties Group announced a deal to buy New Plan Excel Realty Trust for $6.2 billion.
After the deal closes, Centro will control a portfolio containing 679 centers and totaling 105 million square feet — making it the third largest owner of neighborhood and community shopping centers in the United States (see rankings on p. 32).
And the market should prepare itself for more acquisitions in the sector, says David Leivowitz, an analyst with Burnham Securities, Inc. The most likely targets are those companies “whose stock does not accurately reflect either the asset base or the growth rate or some unique features that they might represent.”
The New Plan/Centro deal is expected to close in the second quarter of 2007, removing New Plan, the fourth largest shopping center REIT in the country, from the list of publicly traded retail real estate companies. The transaction was unanimously approved by New Plan's board of directors and is awaiting shareholder approval. It is not contingent on Centro receiving financing or approval from its shareholders. New Plan owns interests in and manages 68.3 million square feet of space in community shopping centers.
Centro will pay $33.15 per share for New Plan — a 12.9 percent premium on where New Plan's stock closed before the deal was announced. “The price is certainly higher than we would expect,” says Richard Moore, an analyst with RBC Capital.