Equity Residential absorbs Merry Land & Investment Talk about the biggest getting bigger. Chicago-based Equity Residential Properties Trust, the nation's largest multifamily REIT, announced that it has entered into an agreement to merge with Merry Land & Investment Co. Inc., a multifamily REIT based in Augusta, Ga.
Equity Residential will integrate Merry Land's 118-property portfolio into its own, giving Equity Residential a grand total of 656 properties containing 187,543 units. The entity will bear Equity Residential's name and increase its total market cap to $12 billion. Equity will assume Merry Land's outstanding debt of approximately $656 million and $370 million in preferred stock.
Merry Land was valued at approximately $2.2 billion in the merger, a tax-free transaction to be accounted for as a purchase. For each share of Merry Land common stock, shareholders will receive .53 common shares of Equity Residential stock. Equity will also issue approximately 23.6 million new shares of common stock and operating partnership units. Also in the works is a plan to issue one share of a new public "C corp" for every 20 shares of Merry Land common stock held, which should help expand Merry Land's noncore real estate operations. This entity will be managed by Merry Land's CEO W. Tennent Houston and COO Michael Thompson.
In a July release, Merry Land's chairman, Boone A. Knox, stated, "Our premiere apartment portfolio attracted the interest of several suitors; however, Equity Residential offered the most appealing platform for growth and long-term value for our shareholders."
The transaction has been approved by Equity's board of trustees and Merry Land'sboard of directors, and the proxy should be mailed to shareholders by late October. The transaction should close in November, pending approval of both firms' shareholders. Equity was advised by J.P. Morgan, and Merry Land by Morgan Stanley.
Trammell Crow snags Faison & Associates Trammell Crow Co. continues with its M&A-mania. After recently acquiring thefirms Doppelt & Co. and Fallon Hines & O'Connor, Trammell Crow announced that it has agreed to purchase the assets of Charlotte, N.C.-based Faison & Associates Inc. The $39.1 million transaction does not include Faison-Stone, Faison's wholly owned Texas subsidiary, existing properties owned and developed by Faison, and certain projects already in development.
The acquisition strengthens Trammell Crow's presence in Washington, D.C.; Richmond, Va.; Charlotte, N.C.; Atlanta and Central and South Florida. The firm's leasing and management portfolio increases 22%, while shopping centers under management double. Faison's 51 million sq. ft. portfolio will increase Trammell Crow's leasing and management portfolio to more than 416 million sq. ft., including corporate facilities. Overlapping offices in Milwaukee, Washington, Richmond, Charlotte, Atlanta, Orlando, Tampa and Boca Raton, Fla., will be combined.
After this transaction, Trammell Crow will lease and manage a total of more than 11 million sq. ft. of regional malls. Faison's founder and chairman, Henry J. Faison, will serve as an executive vice president at Trammell Crow and president of its new subsidiary, Trammell Crow Faison Regional Mall Services.
"I plan to play a very active role at Trammell Crow Co.," says Faison. "I will be in front of our customers as I have always been, and I am excited about helping to grow the retail business."
St. Joe Co. To buy Goodman Segar Hogan Hoffler Today, Florida, tomorrow, the world! Well, maybe The St. Joe Co. of Jacksonville, Fla., doesn't have its sights set on world domination, but the largest private land owner in Florida just got a mite bigger. St. Joe has been in negotiations to buy the majority ownership interest in Goodman Segar Hogan Hoffler, a Norfolk, Va.-based commercial real estate company.
St. Joe already owns approximately 3% of Florida - more than 1.1 million acres - and manages and develops commercial, industrial and residential properties. The firm also operates two Florida railroads and processes sugar cane on the Trailsman Sugar Plantation, a tract measuring nearly 50,000 acres in southern Central Florida.
"The potential this acquisition presents for both our employees and clients is exciting," says Jerry L. Moore, CEO of Goodman Segar. "The St. Joe Co.'s core business is real estate and their commitment to our industry will enable us to be competitively positioned for future success."
Dominion Capital Inc. purchased the majority of Goodman Segar in 1986. Dominion and Armada Hoffler Holding Co. currently own 74% of the 99-year-old company.
Focus Group Inc. sells fortfolio for $168 million Focus Group Inc. has sold 2,600 apartment units in Atlanta and Tampa, Fla., for $168 million. The units are predominantly luxury garden apartment complexes developed by Atlanta-based Focus.
The apartments were sold in three transactions:
* Equity Residential Property Trust, the REIT based in Chicago, acquired 1,280 units in Atlanta for approximately $75 million.
* Tiger/Westbrook Real Estate Partners L.P., a former Focus Group partner, purchased a remaining interest in 922 units on three Atlanta properties.
* Camden Property Trust, a Houston-based REIT, acquired a 408-unit bayfront luxury complex in Tampa.
Focus Group owns and manages multifamily housing in the southeastern United States. The company is currently developing more than 600 units in the metro Atlanta area, and has 650 units in the planning stages in Florida.
New York groups snap up peachy Atlanta properties The investment-sales market in Atlanta isn't missing a beat. In July, a joint venture between Bruce S. Brickman & Associates and Credit Suisse First Boston bought Northlake Office Park, a 14-building portfolio situated near Interstate 285 in suburban Atlanta. The seller was a New York investment firm. The purchase price was $97.5 million.
The sale attests to the strength of investment sales in and around Atlanta, says Will Yowell of CB Richard Ellis' Atlanta office. "Considering the scope of this investment, this transaction can be seen as a bellwether for the optimism that most capital sources have regarding future opportunities in the Southeast," says Yowell, who represented the seller with Glenn Whitmore, managing director in CB Richard Ellis' New York office.
The sale ranks as the largest office sale this year in Atlanta. However, it will easily be eclipsed when the sale of Peachtree Center is finalized. Taylor Simpson Group of New York, which has offered $245 million for the complex with 2.3 million sq. ft. of office space, could close on its purchase from a partnership between The Equitable Cos. and Nippon Life Insurance Co. as early as this month.
RAK Group, also of New York, had been the high bidder for the project designed by John C. Portman Jr., but it pulled out of a $255 millionin July. The Equitable-Nippon Life partnership, which held a $332 million mortgage on the landmark project, assumed control of it in 1990.
Kennedy-Wilson merges, gets new financing Kennedy-Wilson Inc., an international real estate marketing and investment services company, merged with Heitman Properties, a subsidiary of Heitman Financial, forming a property management division called Kennedy-Wilson Properties Ltd.
"We are confident that this merger will give both companies access to services and markets that were not a part of their core businesses," says Barry Schlesinger, new president of Kennedy-Wilson Properties Ltd. and former CEO of Heitman Properties.
The merger gives KWI the ability to put its property management experience to use in the Asian market, where the company already has a brokerage and investment presence.
"Completing the Heitman Properties merger is an important step in the evolution of Kennedy-Wilson becoming a more powerful, multinational force in the real estate industry," says William J. McMorrow, chairman and CEO of Kennedy-Wilson Inc. "Heitman's fee-based structure will also serve to strengthen and support KWI's well-established commercial and residential brokerage operations, and worldwide principal investments."
In addition to the commercial and residential brokerage fees provided by KWI, Kennedy-Wilson Properties will generate income from its property management, leasing, construction management and development capabilities.
Also, KWI announced the closing of major financing in an agreement with Los Angeles-based Colony Capital Inc., an international real estate investment firm.
The financing consists of $21 million in subordinated debt and the sale of 440,085 new common shares to yield $5.2 million in proceeds. Colony currently owns 10% of KWI's outstanding common stock.
The alliance calls for Colony to provide funding for KWI's real estate endeavors, while KWI will provide brokerage and property management for Colony's investments.
"This significant investment and endorsement by Colony Capital will assist Kennedy-Wilson to grow its real estate business by being affiliated with one of the exceptional real estate companies in the world," says McMorrow.
KWI currently has a 52 million sq. ft. national portfolio of office, industrial and residential management contracts worth approximately $6.5 billion.
Venture nabs Tower Realty Trust for $734 million In a transaction worth approximately $734 million, Metropolitan Partners will acquire New York-based Tower Realty Trust. Metropolitan Partners, a joint venture between Reckson Associates Realty Corp. and Crescent Real Estate Equities Co., will pay $24 per share for the self-managed REIT.
Tower stockholders will be entitled to .4615 of a share of Reckson common stock and .3523 of a share of Crescent common stock in lieu of $24 cash, for up to 40% of the total consideration payable in the transaction. Partnership units in Tower Realty Operating Partnership L.P. will receive the same treatment as Tower stock. The purchase price also includes assumption of Tower stock.
"We believe this transaction provides excellent value to Tower Realty Trust shareholders and the opportunity to participate in the growth of two prominent REITs," says Tower CFO Lester S. Garfinkel. "Tower's real estate properties will now become part of an enterprise which will have far greater resources. This transaction provides Tower shareholders with the opportunity to receive a cash payment which is higher than Tower's 1998 stock price range or, if they choose, the ability to receive an ongoing equity interest in Crescent and Reckson."
Tower Realty is headed by CEO, president and Chairman Larry Feldman, one of the first people to champion the cause of Times Square. Tower's portfolio currently consists of 24 office buildings containing approximately 4.2 million sq. ft. of space.