PREIT Acquires Rubin In $260 Million Transaction Fort Washington, Pa.-based Pennsylvania Real Estate Investment Trust (PREIT) has closed on the $260 million acquisition of The Rubin Organization (TRO), Philadelphia. When the acquisition received final shareholder approval in September, PREIT's retail real estate ownership grew from 33 shopping centers (14 wholly owned and 19 owned in partnerships or joint ventures) to 39 shopping centers. Its total market capitalization increased from $400 million to $660 million.
Under the terms of the transaction, PREIT will conduct its operations through an umbrella partnership REIT (UPREIT). It will contribute its real estate interests to a newly formed operating partnership (OP) and will serve as the sole general partner of the entity.
The partnership acquired 95 percent of the equity of TRO in exchange for the issuance of 200,000 OP units. The transaction includes a provision to issue up to 800,000 additional OP units throughout the next five years.
The acquisition comprises the following: * four shopping centers (The Court at Oxford Valley in Langhorne, Pa.; Springfield Park in Springfield, Pa.; Hillview Shopping Center in Cherry Hill, N.J.; and Northeast Tower Center in Philadelphia) previously owned by affiliates of TRO. The tender includes approximately $75 million in OP units, the assumption of debt, and cash.
* two shopping centers (Magnolia Mall in Florence, S.C., and North Dartmouth Mall in Dartmouth, Mass.) nearing completion. The projects were acquired by TRO from an entity affiliated with the principals of Equity Properties & Development L.P. for 213,038 OP units in lieu of $5 million of the purchase price.
* TRO's rights to four potential shopping center sites (in Delaware and Pennsylvania). The rights were acquired in exchange for an obligation to issue, upon completion of the properties, OP units equal to 50 percent of the development profit. PREIT also will reimburse TRO for certain pre-development expenses related to the properties.
PREIT will retain its name and will maintain headquarters in Fort Washington. The company will continue trading on the American Stock Exchange under the ticket symbol "PEI."
The management company -- formerly known as The Rubin Organization -- will now be called PREIT-Rubin Inc. and will retain its offices in Philadelphia. Rubin currently manages and leases 53 shopping centers (20 million sq. ft.) in 20 states.
Ronald Rubin, founder and chief executive officer for TRO, has been named chief executive officer for PREIT. Sylvan M. Cohen, chairman and chief executive officer for PREIT, will continue to serve as chairman of PREIT's Board of Trustees and the Property Committee. Jonathan B. Weller will continue to serve as president and chief operating officer for PREIT. George Rubin has been named president of PREIT-Rubin Inc., and Edward Glickman, executive vice president and chief financial officer for Rubin, will serve in the same capacity for PREIT.
FAC Forms Joint Venture With Atlantic Real Estate Corp. Cary, N.C.-based FAC Realty Trust Inc. and Durham, N.C.-based Atlantic Real Estate Corp. (ARC) have entered into an agreement to jointly develop and manage community and neighborhood shopping centers in North Carolina. The new venture, to be named Atlantic Realty L.L.C., will be based in Durham.
FAC Realty will be the managing member of the venture and will supervise operations. The company also will be responsible for initial equity investments and will direct leasing, property management and marketing for new projects. ARC will provide construction financing, develop and build new projects, and lease anchor space.
As part of the transaction, Atlantic Realty may convert in part to a DOWNREIT, at which time Atlantic Real Estate Corp. would receive units equivalent to shares of common stock in FAC Realty Trust for its ownership interest in each development. FAC Realty will receive interest on its equity contribution during the construction period and a cumulative preferred return during the period of operations through the project's conversion into a DOWNREIT or the sale of the project.
The joint venture plans to build future projects totaling nearly 1 million sq. ft. in the next few years. The proposed developments include Park Place in Cary, N.C., which features a 60,000 sq. ft. Carmike Theater; a 38,600 sq. ft. Food Lion-anchored shopping center under construction in Pembroke, N.C.; and four other developments expected to total approximately 700,000 sq. ft.
Ames Continues Store Rollout With its two simultaneous store openings on Oct. 16, Ames Department Stores ends its 1997 development program with nine new stores and seven remodels. The Rocky Hill, Conn.-based discounter now has 298 stores in 14 states throughout the Northeast.
The nine newcomers are located in Falmouth, Maine; St. Johnsbury, Vt.; West Lebanon, N.H.; Mercerville, N.J. (October opening); Manchester, N.H. (October opening); Phoenixville, Pa.; Bridgeton, N.J.; New Bedford, Mass.; and Kingston, N.Y.
The new and remodeled stores follow the chain's latest design format, which was introduced in late 1994. According to Ames president and chief executive officer Joseph Ettore, the 72,000 sq. ft. in-line stores were designed for enhanced convenience.
"The overall thought when we designed the new format was to make it as customer friendly as possible," he says. "We listened to focus groups and advisory boards... We wanted to know from customers what they like and don't like about a discount store when they walk in."
As part of the new look, a circular "racetrack" aisle drives traffic around the perimeter of the store. Key departments such as domestics, furniture and electronics are easily identified by large graphics and signage.
In addition, Ettore says, "We've put what we call 'soft corners' in the four corners of each store, which enables us to highlight some of our major departments." Fixtures run diagonally, which improves site lines and enables customers to view an entire department, he adds.
To facilitate the return process, the customer service desk was moved from the front of the store to a corner behind the cash register. "It takes the customer out of the traffic aisle, it's easier for our people [to] work with customers, and it also opens up [a central] section in the front of the store where the customer service desk was," says Ettore. Seasonal merchandise is now displayed in the central location, dubbed the opportunity spot, or "op-spot."
Ames currently has approximately 60 new or remodeled stores open in 14 states throughout the Northeast. The retailer will implement the new image in 15 to 20 existing stores next year, says Ettore. It also has plans to roll out five to 10 new stores next year.
Community Service Lines Up At Northgate Mall Originating in a former lingerie shop, Northgate Station, a public safety information center at Northgate Mall, might have expected a few sneers. A year after opening shop, however, the center has become a serious installment in the mall's traffic-building and community service strategies.
Located in Colerain Township, Ohio, Northgate Mall underwent extensive renovation in 1996. As the project moved forward, and as tenants began moving into the renovated space, empty storefronts remained in the mall's older sections.
Taking note of the open space, officials of Colerain Township's Bureau of Fire and Life Safety approached Northgate's general manager Hunter Lawrence to discuss the possiblity of establishing a fire safety and public education center. The space was leased to the Bureau for $1 per year, and Northgate Station joined the mall's tenant roster.
According to Robert Rielage, assistant chief for Colerain Township's Department of Fire and EMS, the Station had meager beginnings. The township contributed $1,000 to the venture and used staff labor to build the first series of displays.
Today, vistors to Northgate Station are greeted with an electronic message board displaying the latest safety news and community events. In addition to public safety literature, the center features displays that address topics ranging from home security and child identification programs to bicycle, boating and fire safety.
The center is staffed by one firefighter on evenings and on weekends and is otherwise staffed by volunteers. Interactive displays, including a talking fire hydrant named PETE (Prevention and Education Through Entertainment) and equipment that children can try on, make the center a popular stop for mall visitors.
"The station increases the overall shopper stay and provides a community service," says Lawrence. "This is one vehicle that keeps families in our center."
Northgate Mall is owned by Cincinnati-based Northgate Mall Associates L.P., and it is managed and leased by Chicago-based LaSalle Partners.
Aegis Realty Makes Its IPO Aegis Realty Inc. has joined the 1997 class of real estate investment trusts (REITs), completing its public offering on Oct. 8. The New York-based REIT, which is listed on the American Stock Exchange under the stock symbol "AER," is targeting neighborhood shopping centers and multifamily housing properties.
Aegis is a consolidation of four partnerships previously sponsored by affiliates of Related Capital Co., a New York-based real estate financial services firm. Its portfolio, currently valued at approximately $121 million, comprises 14 grocery-anchored neighborhood shopping centers in 10 states, with an aggregate of more than 1.3 million sq. ft. of retail space. Also included in the portfolio are two apartment properties totaling 236 units and mortgages on three multifamily residential rental properties with outstanding balances of $27.6 million.
The growth strategy for the REIT entails acquisition and redevelopment of retail and multifamily properties. "Aegis will benefit from Related's national presence and resources to identify properties which can take advantage of professional management and redevelopment expertise," says J. Michael Fried, president of Related Capital.
Aegis reports outstanding debt of approximately 7 percent of its portfolio value of $121 million. "In comparison to other REITs, Aegis virtually has no debt," says Stuart Broesky, senior managing director for Related Capital. Broesky pegs the industry norm for debt in the 30 percent to 40 percent range.
Aegis has approximately 8 million shares of common stock outstanding, with a net asset value of $15 per share. Principals and affiliates of Related Capital own approximately 1.1 percent of the REIT's outstanding stock.
Related Capital Co. and its affiliates manage 22 public and 238 private real estate investment programs representing more than $3.1 billion in investor equity.