Court delays Rodamco deal as shareholders question price

AFTER A PROTRACTED STRUGGLE TO REACH A DEAL, the $5.3 billion sale of Rotterdam, Netherlands-based Rodamco North America N.V. (RNA) to three mall developers has been postponed again.

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Rodamco shareholders originally were scheduled to vote on the transaction Feb. 26, but the Enterprise Chamber of the Amsterdam Court of Appeal put the vote on hold when minority shareholders of the retail property owner argued that the sale price was too low. The court will hear arguments on the matter at a March 21 hearing.

Under the original deal reached in January, Los Angeles-based Westfield America, Indianapolis-based Simon Property Group and Columbia, Md.-based The Rouse Co. agreed to buy the remaining ownership interests in their respective joint ventures with RNA. Westfield America would acquire 43% of RNA's retail assets, Simon 30% and Rouse 27%. Westfield would gain 14 centers, Simon 13 and Rouse eight.

RNA's mall assets generate industry-leading sales of more than $450 per sq. ft. and are 93% occupied. If the sale is approved, the three companies will jointly own and manage Urban Retail Properties, the property management affiliate of RNA.

Westfield's share of the gross value of the transaction is about $2.3 billion, including $936 million of property debt and perpetual preferred stock. Simon's piece of the deal is about $1.55 billion, including $570 million in debt and preferred stock. The Rouse Co.'s share is about $1.45 billion, including $675 million of debt and stock.

What made the Rodamco portfolio so attractive to Westfield, Simon and Rouse? The firm's Class-A stable of properties. The Rodamco portfolio includes world-class malls in Boston, Chicago and Los Angeles, says Richard Moore, a senior vice president with Cleveland, Ohio-based McDonald Investments. “The bigger guys in the mall REIT sector have tried to upscale their portfolios by acquiring higher-end properties. Rodamco is a huge catch because it is chock full of them.”

In a report examining the deal, Salomon Smith Barney analysts Jonathan Litt and Ross Nussbaum declare the transaction a “win-win” for all parties. “We are not surprised to see a deal involving all three companies, given that each already owned Rodamco assets or shares,” Litt and Nussbaum write. The move would help Simon protect its geographic positioning and give Westfield and Rouse the opportunity to strengthen their respective positions in California and Chicago.

By acquiring three Rodamco properties in the Boston area — Copley Place, The Mall at Chestnut Hill and Pheasant Lane Mall — Simon will significantly beef up its presence in that market. In terms of mall revenues, Boston will likely become the No. 1 market for Simon.

Westfield would add several malls to its California portfolio, including Century City, Galleria at Roseville and Mainplace. Rouse would acquire two dominant Chicago malls, Oakbrook Center and Water Tower Place, and also gain 100% ownership of Perimeter Mall in Atlanta and Willowbrook in New Jersey.

With the sale of Rodamco North America, three independent, regionally focused companies will remain: Rodamco Europe N.V., Rodamco Asia N.V. and Haselmere N.V.

New Plan beefs up Southwest market presence

In a deal worth $654 million, New York-based New Plan Excel Realty Trust has acquired 92 community shopping centers from Houston-based CenterAmerica Property Trust.

The properties total 10.4 million sq. ft. of gross leasable space (GLA), of which 71% is grocery-anchored. Most are located in high barrier-to-entry markets, including Houston and Dallas/Fort Worth, with other properties in Florida, Louisiana, Mississippi and New Mexico.

According to Glenn Rufrano, CEO and president of New Plan Excel, several strong tenants, including four of the top five grocers in Texas, anchor the centers. “This transaction significantly furthers our objective of a focused product strategy,” Rugrano said in a statement.

Scott MacDonald, currently CEO and president of CenterAmerica, also will join New Plan Excel Realty Trust as COO and president as part of the deal.


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